Daddy, are we there yet?

Al­most, son, Icasa tells tele­coms in­dus­try

Finweek English Edition - - Property Compass - BELINDA AN­DER­SON

WHILE SOUTH AFRICA’S telecom­mu­ni­ca­tions in­dus­try cel­e­brated reg­u­la­tor Icasa’s an­nounce­ment it would con­vert all value added net­work ser­vice provider (Vans) li­cences into fully fledged op­er­a­tor li­cences by midJan­uary, there was some frus­tra­tion be­cause they had to wait al­most an­other two months.

The wait is un­der­stand­able from the per­spec­tive that Icasa must con­vert all 300 or so Vans while also solv­ing the is­sue of li­cence fees. From mid-De­cem­ber, SA grinds to a vir­tual halt un­til mid-Jan­uary, so there are only a few more re­ally pro­duc­tive weeks left this year.

How­ever, for a player such as Al­tech – which took the fight for its right to hold an elec­tronic com­mu­ni­ca­tions net­work ser­vices (ECNS) li­cence (as well as an elec­tronic com­mu­ni­ca­tions ser­vices li­cence, or ECS) to the courts and won the same right for ev­ery other Vans op­er­a­tor – the wait must be frus­trat­ing.

In Au­gust, the High Court ruled Vans op­er­a­tors had the right to pro­vide their own net­works since a 2005 min­is­te­rial determination and hence should re­ceive both li­cences. But Icasa had put the li­cens­ing of Vans on hold pend­ing the out­come of an at­tempt by Com­mu­ni­ca­tions Min­is­ter Ivy Mat­sepe-Casaburri to ap­peal the judg­ment. Her at­tempt was un­suc­cess­ful.

John Holdsworth, CEO of ECN, a voice over In­ter­net pro­to­col (VoIP) op­er­a­tor and Vans li­censee un­der the old Telecom­mu­ni­ca­tions Act, says there’s no point in try­ing to hurry up the pro­ce­dure through the courts at this time of year. Op­er­a­tors will just have to pro­vide the in­for­ma­tion Icasa has asked for and wait for their li­cences to be de­liv­ered.

Icasa is­sued a no­tice on 14 Novem­ber in the Gov­ern­ment Gazette con­firm­ing Vans li­cences would be con­verted to ECS and ECNS li­cences. It re­quires writ­ten sub­mis­sions be­fore 5 De­cem­ber from ex­ist­ing Vans op­er­a­tors on how it should pro­ceed with con­vert­ing their li­cences into ECNS li­cences. As part of that, it wants in­for­ma­tion on whether each Vans wants a class (lo­calised area) or in­di­vid­ual (large area, such as a na­tional net­work) li­cence. Vans must also in­di­cate which ge­o­graphic area they will cover and un­der­take to start net­work roll­outs within 12 months of the li­cences be­ing is­sued.

Icasa said their writ­ten rep­re­sen­ta­tions should also in­clude a com­pre­hen­sive tech­ni­cal plan, plus “vol­un­tary obli­ga­tions” on what they in­tended to con­trib­ute to SA’s so­cio-eco­nomic de­vel­op­ment.

Holdsworth de­scribes the de­lay and the process the reg­u­la­tor has put in place for li­cence con­ver­sions as “pos­tur­ing” and an at­tempt to ap­pease all sides.

He says al­though the courts had ruled all Vans li­censees were en­ti­tled to ECNS li­cences – pe­riod – there was an im­plicit threat in that Icasa was ask­ing for a net­work plan it could use as a ba­sis for re­view­ing each li­censee a year down the line. This is a con­cern, Holdsworth says.

An­other con­cern is the pos­si­bil­ity the Com­mu­ni­ca­tions Min­is­ter could still ap­peal to the Supreme Court or Chief Jus­tice that she should have the right to ap­peal.

The re­main­ing con­cern – and the most sig­nif­i­cant of the three – is the is­sue of li­cence fees. Icasa pub­lished draft li­cence fee reg­u­la­tions on 24 Oc­to­ber and wants com­ments by 5 De­cem­ber.

Icasa pro­posed li­cence fees of 3%/year of gross rev­enue for both in­di­vid­ual ECNS and ECS li­cences and 1,5% of gross rev­enue for class ECNS and ECS li­cences, plus cer­tain ad­di­tional up­front fees.

The reg­u­la­tor said the frame­work for the determination of li­cence fees was that in­di­vid­ual li­censees should pay more than class li­censees, the du­ra­tion of the li­cence should be a key de­ter­mi­nant of cost and there should be a thresh­old of per­haps R1m, un­der which smaller com­pa­nies only paid a mar­ginal an­nual fee. And while the cost of li­cences should cover the cost of reg­u­lat­ing the mar­ket, li­cence fees shouldn’t be a bar­rier to en­try.

Holdsworth says in an in­dus­try with mar­gins rang­ing be­tween 7,5% and 15%, an­nual fees of 3% of rev­enue could be a bit hefty. But that would be an is­sue for li­cence ap­pli­ca­tion hear­ings. The im­por­tant thing for now is that, in prin­ci­ple, Icasa will con­vert all li­cences by 19 Jan­uary – a key victory for the in­dus­try.

No point in hur­ry­ing. John Holdsworth

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